AT&T-T-Mobile merger faces potential opposition

AT&T and T-Mobile logos.

UPDATED INTERVIEW

JEREMY HOBSON: Right now AT&T is the second largest cell phone carrier in the country. T-Mobile is the fourth largest. But if the two get together as they would like to do, they will become Numero Uno. And today is the deadline for the competition to tell federal regulators how they feel.

Marketplace's Gregory Warner joins us now live with more on this story. Good morning.

GREGORY WARNER: Good morning.

HOBSON: So who's opposed to this merger, Gregory?

WARNER: We'll Sprint of course is opposed. It's number three largest carrier. And Sprint is saying that this merger's going to create a duopoly with AT&T and Verizon hogging the trough and squeezing out the competition, leaving us customers with fewer choices of handsets and higher prices. Of course I already feel like I have too many handsets to choose from but on the price question: At least two state regulators have opened their own investigations into that.

HOBSON: And it's federal regulators, right that will ultimately have to decide on whether to approve this deal. What's likely on that front?

WARNER: Well, right. And the question isn't just will the deal be approved but on what terms. Because under the Obama administration, these two federal agencies -- that's the FCC and the Department of Justice -- they've shown a willingness to allow these deals to go forward but with unusually specific financial restrictions.

I spoke to Rob Frieden professor of telecommunications and law at Penn State University. He said we saw that kind of approach with the Comcast takeover of NBC-Universal earlier this year. Comcast had to make very specific promises. For example, they said they'd lower the price of broadband to poor families to under $20 a month.

ROB FRIEDEN: Yes and they sealed the deal because these are commitments that take money off the profit line and do good.

He said the challenge is enforcement because the FCC doesn't have a track record on following through on these agreements.

HOBSON: Marketplace's Gregory Warner, thanks Gregory.

WARNER: Thank you Jeremy.


ORIGINAL INTERVIEW

JEREMY HOBSON: Right now, AT&T is the second largest cell phone carrier in the country. T-Mobile is the fourth largest. But if the two get together they will become the Big Kahuna in the cell phone service market. And today is the deadline for the competition to tell federal regulators how they feel.

Marketplace's Gregory Warner joins us now live with more on this story. Good morning.

GREGORY WARNER: Good morning.

HOBSON: Well, Gregory, there seems to be growing opposition to this merger.

WARNER: No, absolutely. And not least from Sprint. I talked with Sprint spokesman John Taylor this morning and he says that this merger would create a duopoly. Because it's basically making AT&T and Verizon so huge that they squeeze out competition.

JOHN TAYLOR: For consumers it could mean less choice for handsets, it could mean higher prices.

And some states have opened their own investigations into the deal and its effect on prices. On the other side though, the FCC will hear from rural organizations and rural governors that say this merger would allow AT&T to deploy its fourth generation -- its 4G technology to 97 percent of Americans. That's at a time when people are using their phones to do a lot more.

HOBSON: Well, does it look like this deal will be approved by federal regulators in the end?

WARNER: I think the question isn't just will the deal be approved, but on what terms. The Justice Department under President Obama has shown a willingness to allow mergers to go forward, but with creative behavioral restrictions. So, we saw that taking over the travel search company ITA and Comcast taking over NBC -- both companies had to promise to play fair and not restrict competitors access to content. If AT&T is approved might have to sign a similar deal.

HOBSON: Marketplace's Gregory Warner, thanks Gregory.

WARNER: Thank you.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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